Investors are turning away from U.S. stocks and toward Eurozone and emerging market equities, according to the BofA Merrill Lynch April Fund Manager Survey.
A net 20% of investors are now underweight U.S. equities – the lowest level since January 2008 – while 44% are overweight emerging market equities – the highest percentage in five years.
And an even higher percentage of investors, a net 48%, are overweight Eurozone equities, marking a 15-month high. The Eurozone, in fact, is now “the most favored” global region among fund managers, according to the survey.
(Related: US Stocks ‘Deeply Overbought’: Russell)
“Investors are showing love for Europe and scrambling out of U.S. equities, as the majority find U.S. stocks overvalued and perceive a risk of delayed U.S. tax reform,” said Michael Hartnett, chief investment strategist, in a press release.
Eighty-three percent of investors say U.S. stocks overvalued – a record high – and only 5% expect U.S. tax reform will be passed before the summer recess. Slightly more than 40% expect tax reform will pass by the end of the year, which is about the percentage that expect it won’t pass before next year.
(Related: Market’s Moves Not All About Trump: Sonders)
U.S. stocks had rallied sharply after the election of Donald Trump in part because of his plans to cut corporate taxes, and hit record highs on March 1 before retreating.